In re Users Systems Serv.

• Decision Date: 23 September 1999
• Citation: 22 S.W.3d 331
• Parties: (Tex. 1999) IN RE USERS SYSTEM SERVICES, INC., USSI COMPUTER SERVICES, INC., AND RON LANDRETH, RELATORS NO. 98-0806
• Court: Texas Supreme Court

Page 331

22 S.W.3d 331 (Tex. 1999)

IN RE USERS SYSTEM SERVICES, INC., USSI COMPUTER SERVICES, INC., AND RON LANDRETH, RELATORS

NO. 98-0806

IN THE SUPREME COURT OF TEXAS

Argued February 10, 1999

Decided June 24, 1999

Rehearing Overruled September 23, 1999.

ON PETITION FOR WRIT OF MANDAMUS

JUSTICE HECHT delivered the opinion of the Court, in which CHIEF JUSTICE PHILLIPS, JUSTICE ENOCH, JUSTICE OWEN, JUSTICE ABBOTT, JUSTICE O'NEILL, and JUSTICE GONZALES joined.

Rule 4.02(a) of the Texas Disciplinary Rules of Professional Conduct states:

In representing a client, a lawyer shall not communicate or cause or encourage another to communicate about the subject of the representation with a person, organization or entity of government the lawyer knows to be represented by another lawyer regarding that subject, unless the lawyer has the consent of the other lawyer or is authorized by law to do so.¹

The issue in this original mandamus proceeding is whether a lawyer should be disqualified from continuing to represent a litigant in a civil case for meeting with an opposing party, at the party's request, if prior to the meeting the party stated that he was no longer represented by counsel, but his former attorney had not moved to withdraw from the case. A divided court of appeals, sitting en banc, conditionally granted mandamus relief directing the district court to order counsel disqualified in these circumstances.² We disagree and therefore direct the court of appeals not to issue its writ.

I

USSI Computer Services, Inc., Users System Services, Inc., and their principal, Ron Landreth, (collectively "USSI") sued USSI's former president, Donald Ray Frazier, two former vice presidents, Eugene M. McKeown and Sandra S. Shaffar, and a former customer, News America Publishing, Inc., in August 1993 for breach of contract, tortious interference with business relations, and other claims. (USSI has sued others not involved in the matter before us, and we do not include them in referring to "the defendants".) USSI alleged that for years it had provided software systems and computer services to News America, but that after Frazier, McKeown, and Shaffar left USSI, the three went to work for News America and systematically began to destroy USSI's business relationship with News America. USSI was represented by lawyers at the firm of Akin, Gump, Strauss, Hauer & Feld, including Karen Gulde. Defendants were all represented by Mark Cannan.

In May 1995, nearly twenty-one months after suit was filed, Landreth telephoned Frazier to propose a meeting at Akin Gump's offices to discuss their differences in the litigation. Frazier accepted. (Landreth also called Shaffar, but she refused to discuss the lawsuit with him.) At the meeting, Frazier presented Gulde with a letter referencing the pending litigation, which stated:

Dear Ms. Gulde:

This is to inform you that I desire to meet with you today to discuss the above-referenced lawsuit without the assistance of counsel. Prior to meeting with you, I decided to terminate my representation by Mark Cannan. Therefore, I hereby state that I am no longer represented by any attorney in this matter, and I do not desire to be represented by counsel in connection with my discussions with you, Ron Landreth, and any of the attorneys for Plaintiffs in this case.

Sincerely,

s/ Donald Ray Frazier

Based on this letter, Gulde agreed to participate in the discussions between Frazier and Landreth. During the meeting, Frazier gave Landreth a handwritten statement describing certain events leading up to News America's limiting its relationship with USSI. Landreth and Gulde did not reach a settlement with Frazier at the meeting, but later that day Gulde filed a nonsuit of all USSI's claims against him.

Neither Gulde nor Landreth ever attempted to contact Cannan - either before meeting with Frazier, or after nonsuiting him - to ask whether he was aware that Frazier had terminated his representation. In fact, Cannan did not know because Frazier had never spoken with him about the matter. Even when Cannan called Frazier about the nonsuit, Frazier did not tell him that he wanted to terminate their relationship. Thus, the court file reflects that Cannan was Frazier's counsel of record when the nonsuit was filed. Not until January 1996, while deposing Landreth, did Cannan learn of the May meeting, Frazier's letter to Gulde, and Frazier's handwritten statement.

Cannan took no immediate action in response to Landreth's testimony. In June, USSI supplemented its interrogatory answers to identify Frazier as one of its expert witnesses. In July, Cannan again deposed Landreth, who reconfirmed his earlier testimony concerning his meeting with Frazier. Then, in August, a little more than four months before a January 1997 trial setting, defendants News America, McKeown, and Shaffar moved to sanction USSI by disqualifying the Akin Gump firm from representing USSI further, based on Gulde's violation of Rule 4.02(a). At the hearing on the motion, Cannan complained specifically that he had not been contacted before the meeting with Frazier. "Frankly," Cannan told the court, "we [he and Akin Gump] are in the same building. I rather suspect that if a phone call had been made and Frazier took the elevator for two or three floors to my office and told me, 'You're fired, I'm gonna go talk to these people,' everything would have been copacetic, I suppose . . . ." At the conclusion of the hearing, the district court denied defendants' motion.

Defendants petitioned the Court of Appeals for the Fourth District of Texas for mandamus relief. A panel of the court issued an opinion conditionally granting a writ of mandamus. On rehearing en banc, the court issued a new opinion reaching the same conclusion, but over the dissent of three of the seven Justices.³ The court reasoned that the Landreth-Frazier meeting "at the law firm in the presence of a firm attorney can only be interpreted as an encouragement" of communications prohibited by Rule 4.02.⁴ The court was concerned that Frazier made the decision to defect to USSI's side of the lawsuit without benefit of counsel.⁵ The court was also troubled that Cannan's responsibilities as counsel of record under Rules 8 and 10 of the Texas Rules of Civil Procedure could not be terminated by Frazier's letter to Gulde but only by notice to the trial court, which was not given, so that Cannan remained Frazier's counsel of record during the meeting with Landreth and Gulde.⁶ Relying principally on Formal Opinion 95-396 of the American Bar Association Committee on Ethics and Professional Responsibility,⁷ the court concluded that "the spirit of [Rule 4.02] requires the ethical lawyer to avoid such communications when in a litigation setting for as long as counsel for that other party has not officially withdrawn from representation."⁸ Deciding that Akin Gump's conduct had harmed not only the defendants but the legal profession by placing Cannan "in the untenable position of attacking a former client and accusing opposing counsel of unethical behavior in front of a jury",⁹ the court held that mandamus relief was necessary to direct the district court to order Akin Gump disqualified from representing USSI.¹⁰ The dissent, stressing that Frazier had made his decision to terminate Cannan freely and had not complained that Landreth or Gulde had taken advantage of him, argued that Gulde did not violate Rule 4.02.¹¹

We granted USSI's petition for mandamus relief against the court of appeals and set the case for oral argument.¹²

II

As we said recently in In re EPIC Holdings, Inc., "[w]e have repeatedly observed that '[t]he Texas Disciplinary Rules of Professional Conduct do not determine whether counsel is disqualified in litigation, but they do provide guidelines and suggest the relevant considerations.'"¹³ Technical compliance with ethical rules might not foreclose disqualification, and by the same token, a violation of ethical rules might not require disqualification. Here, however, the parties and the lower courts have all focused the issue of whether Akin Gump should be disqualified from representing USSI on Rule 4.02; hence, so do we.

Rule 4.02 forbids a lawyer from communicating with another person only if the lawyer knows the person has legal counsel in the matter. Before meeting with Frazier, Gulde knew he was represented by Cannan, but after Frazier gave Gulde his letter, there is no evidence that Gulde knew Frazier was represented by anyone. Defendants do not argue that Gulde had any reason to disbelieve Frazier. The one possible ambiguity in Frazier's letter - that prior to the meeting he had "decided" to terminate Cannan's representation, not that he had actually done it - is resolved by his unequivocal statement in the letter, "I am no longer represented by any attorney in this matter, and I do not desire to be represented by counsel in connection with my discussions with you".

Having no reason to doubt Frazier's statement, Gulde was not required to call Cannan before talking with Frazier. Rule 4.02 does not require an attorney to contact a person's former attorney to confirm the person's statement that representation has been terminated before communicating with the person. Confirmation may be necessary in some circumstances before an attorney can determine whether a person is no longer represented, but it is not required by Rule 4.02 in every situation, and for good reason. The attorney may not be able to provide confirmation if, as in this case, he and his client have not communicated. And while a client should certainly be expected to communicate with his attorney about discontinuing representation, the client in some circumstances may have reasons for not doing so immediately. Frazier, for example, may not have wanted his co-defendants to know of his decision to meet with Landreth and Gulde for fear that they might try to dissuade or deter him. But whether he had a good reason or...